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Tax legislation and administrative policies are complex and subject to change. Therefore, should you wish to ask for our opinion on any of the matters posted (or any sales tax matter in general), please know that the conclusions reached herein and views expressed are matters of interpretation and opinion rather than certainty. The information provided is based on understanding of the facts as provided by various media sources (and you) and is not meant to represent a ruling, nor is it legally binding.

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Sales Tax Holidays? Special Report

As most know, many states pass legislation each year or have passed it for the future, to allow for various sales tax holidays where the buying public doesn’t have to pay sales taxes on purchases normally subject to the State and sometimes Local sales tax.

In general, these holidays usually come in the form of back-to-school tax holidays where consumers can purchaes items like shoes, clothes, supplies, books and even computers without paying sales tax (TX, NC , etc.). While other states have started implementing Green holidays (GA, WV, etc.) where you can purchase energy efficient rated appliances tax free or holidays that tout the 2nd amendment for guns and rifles (LA, SC). And then there are yet other tax holidays that appeal to people living in hurricane zones where supplies for disaster preparation are exempt (LA, FL).

However, regardless of the tax holiday, it’s purpose or meaning, the Tax Foundation has found fault in this practice. Some of their arguments are:

Sales Tax Holidays do not promote economic growth, but merely shift purchases from one time period to another.

If a state must offer a sales tax holiday from its tax system, it’s a sign that the system is uncompetitive and the whole system should be looked at, not just a time period.

What do you think? Tax holidays good or bad?

For more information on the existing tax holidays, see my other post where I’ve tracked the Sales Tax Holidays for 2009 and I do plan a new post for the upcoming 2010 Tax Holiday Season, because I highly doubt that the states will take seriously what this agency has proliferated as the truth in their research.